Egypt Independent

Al-Azhar: Ministry-proposed bonds at odds with Sharia

Members at Al-Azhar's Islamic Research Academy have rejected a Finance Ministry-proposed bill sanctioning the introduction of Islamic financial bonds, saying it "violates Islamic Sharia and endangers the state's sovereignty."

The scholars voiced their opposition during an urgent meeting late Tuesday led by Al-Azhar Grand Sheikh Ahmed al-Tayyeb.

The bill would allow foreigners to own Islamic bonds (sukuk) and shares in local factories and businesses, academy member and former Grand Mufti Nasr Farid Wasel told Al-Masry Al-Youm.

"It is like we are selling our properties to foreigners," he said.

A 1992 capital market law allows the sale of Islamic bonds, which enable holders to have shares in commercial, industrial and agricultural undertakings under a Sharia-friendly investment structure.

The academy did not specify which aspect of the bill violates Sharia, but said it consulted Al-Azhar University economics experts before declaring a position on the proposed legislation, which aims to secure financial liquidity for economic development projects.

Since Islamist President Mohamed Morsy assumed office in June, there has been speculation that the government will introduce more Islam-friendly financing instruments.

Because they attract pools of conservative Islamic investment money, such bonds have often proved to be more stable than conventional bonds during the global financial crisis, and they might be an effective way to attract some of the savings of millions of Egyptians living abroad or Islamic investment funds in the Gulf, according to Reuters.